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MBA calls for better defined QM guidelines

As the deadline approaches to finalize the much-ballyhooed qualified mortgage proposal, David Stevens, president of the Mortgage Bankers Association, rallied for a more specific standard.

Stevens said he's worried the proposed QM rules will pull credit out of the market. He made his comments Friday at the National Association of Hispanic Real Estate Professionals policy conference in Washington, D.C.

The Consumer Financial Protection Bureau has sole jurisdiction over the QM rule, which presumes financial institutions are in compliance when making loans as long as they follow certain guidelines and verify the borrower's employment, debt-to-income ratio and credit history.

The rule, which is expected to be finalized by the end of June, likely will eliminate no-documentation, stated-income, nonamortizing loans, option ARMs and balloons from the marketplace, Stevens said.

Proposed QM standards are proper in that "they remove variables that caused damage to the mortgage market," he said, but said they are so vague that lenders fear potential legal liabilities. That would lead to tighter credit, rather than a return to a healthy housing market, he added.

Stevens said he wants a clear bright line — or safe harbor provision — that will shield lenders from lawsuits if they fully comply with the QM rule.

“Without a safe harbor, no lender will go anywhere near the line that is established in the QM rule,” Stevens said at the NAHREP conference.

In February, CFPB Director Richard Cordray told the Senate Banking Committee that he is considering the safe harbor issue.

“I don’t have an outcome for you today,” Cordray testified, noting that most lending institutions would like a safe harbor to prevent litigation risk and uncertainties. “Others have taken a different point of view,” he added.


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